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Sabaf
Investor Presentation • Sep 17, 2024
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FINANCIAL PRESENTATION Sabaf – Roadshow in Paris
18th September 2024
www.sabafgroup.com www.sabafgroup.com
Table of contents
- I. COMPANY PROFILE
- II. LATEST STRATEGIC MOVES
- III. FINANCIAL PERFORMANCE
- IV. SUSTAINABILITY
COMPANY PROFILE
Sabaf Group: product range evolution in 4 Business Units
SINCE 2000, further expansion since 2019 SINCE 2022
HINGES
- Ovens
- Dishwashers
- Washing machines
- Refrigerators
- Special applications
- Small compartments
- Catering appliances
Sabaf Group: evolution
5 acquisitions in the last 8 years 3 greenfield plants in the last 3 years
Sabaf Group: leading producer of components for household appliances and company evolution in 4 Business Units
Sabaf Group: industrial footprint
- 2021: 10 production plants
- 2024: 15 production plants (6 in Italy and 9 abroad)
- 1,758 employees at 30 June 2024
OKIDA ELEKTRONIK Electronics for household appliances
SABAF APPLIANCE COMPONENTS (KUNSHAN) Wok burners
SABAF INDIA Valves and burners
7
Valves and thermostats Standard burners Special burners
ARC S.R.L. Professional burners
SABAF S.P.A.
FARINGOSI-HINGES S.R.L. Oven hinges Dishwasher hinges
CMI ITALY (2 PLANTS)
Oven hinges Dishwasher hinges
PGA
Electronics for household appliances
MANSFIELD
Oven hinges Washing machines hinges Refrigerators hinges
SABAF MEXICO Burners
CMI POLAND
Dishwasher hinges
Why investing in Sabaf
Strategy for value creation
Sabaf Group Main shareholders
Cinzia Saleri S.a.p.A. Quaestio SGR Paloma Rheem Investments Fintel S.r.l. Treasury Shares 9.73 % Montinvest S.r.l.
Pietro Iotti, Sabaf CEO, owns 2.18% of voting rights
LATEST STRATEGIC MOVES
Latest strategic moves
Sabaf India
| Sales start | 2Q 2023 |
|---|---|
| Investment | € 5.2 million in 3 years |
| Division | Gas: production of valves and burners for the domestic market |
| Production capacity | 6 million (scalable) € |
Market characterized by:
- strong growth
- customization
- competitive price requests
- 1H 2024: revenues € 0.6 million
- 2H 2024: expected a strong sales ramp-up (~ € 1.5 million)
Completion of the entire production process of valves by 1H 2025
Sabaf Mexico
| Sales start | 1H 2024 |
|---|---|
| Investment | 12 million in 2021-2023 € |
| Division | Gas: production of burners for NA market |
| Production capacity | € 9 million (scalable) |
May 2024: start of sales to Mabe July 2024: start of sales to Whirlpool
Fast production ramp-up, working on 3 shifts
- 1H 2024: revenues € 0.2 million
- 2H 2024: expected revenues ~ € 2.5 million
Further strong growth expected in 2025
Mansfield Engineered Components LLC (MEC) is based in Mansfield, Ohio
MEC is a leading North American manufacturer of hinges for household appliances (mainly ovens, washing machines and refrigerators), designed and manufactured to meet the high quality levels and demanding standards required by the US market
Smooth transition from previous ownership to the management
Visible synergies, for which implementation is ongoing, even thanks to very positive relationships with local management
Ongoing automation in order to improve productivity
Mansfield acquisition
Acquisition July 2023
Division Hinges
Share acquired 51% of share capital
Enterprise value USD 21 million
1H 2024 • Revenues USD 14.8 million • EBITDA USD 1.7 million Despite market weakness, profitability is steadily improving
Sabaf Induction
| Project start | 2021 |
|---|---|
| Sales start | 1H 2024 |
| Investment | About €5 million in R&D in the period 2021 – 2023 |
Sabaf has developed its own project know-how (proprietary patents, software and hardware)
Creation of innovative products which better meet manufacturers' needs and new consumer trends. The project flexibility will enable Sabaf to offer customised products to its clients
The Group benefits from the expertise gained from the acquisitions of Okida and P.G.A. where part of the induction cooking components are produced
Team of more than 60 electronic engineers
Q2 2024: one of the major multinational groups started to produce under Sabaf license
Q3 2024: delivery of samples to 9 customers for testing
Q4 2024 and Q1 2025: expected start of sales to new customers
FINANCIAL PERFORMANCE
Context analysis
Customers
Greater penetration of Turkish and Chinese players in the European market
- Arcelik with WHP EMEA (now Beko Europe)
- Haier with Candy acquisition
- Hisense with Gorenje acquisition
- Midea with Teka acquisition
Weakening of the historical Western players
Reduction in end-users purchasing power
The Sabaf Group thanks to its • global footprint • strong relationships with key market players is able to take full advantage of such trends
Competitors
The last 2 years highlighted the difficulty with resilience of some competitors, which could open opportunities for M&A and/or market share increase
Market trends
18
Europe
• After several quarters characterized by market weakness, the first signs of recovery are emerging
Source: Electrolux 2Q 2024 presentation
North America
• 2Q 2024 industry shipments were positive (+4%), moving 1H 2024 to around -1%. Market was driven by solid replacement demand, partially offset by weak discretionary purchases. Price/mix is negative.
Source: Electrolux 2Q 2024 presentation
- Strong growth in Latin America
- Asia is recovering compared to 2023
- Middle East and Africa performed well, but still affected by the geopolitical picture
First half 2024 Sabaf Group highlights
- Investments in emerging countries
- Product range expansion
In this context Sabaf reported strong results
• Product innovation allow the Group to gain market share and outperform the market
Thanks to its global industrial footprint and available production capacity, Sabaf is ready to respond to the expected recovery after a period of market weakness
| 2Q 2024 | 1H 2024 | |
|---|---|---|
| REVENUE adj | +30.5% | +24.5% |
| (on like for like basis) a - - |
+18.2% | +12.6% |
| EBITDA adj | +46.4% | +47.1% |
| (on like for like basis) a - - |
+36.0% | +36.7% |
| EBITDA MARGIN adj | 16.7% | 16.0% |
| (on like for like basis) a - - |
17.1% | 16.5% |
Quarterly adjusted results1
1Adjusted income statement: results exclude the impact of the application of IAS 29 (Financial Reporting in Hyperinflationary Economies) and, only for 2023 data the start-up costs of Sabaf India, Sabaf Mexico and the Induction division. This representation allows a better understanding of the Group's performance and of its comparison with previous periods.
Adjusted income statement1 - 6 months 2024
| € x 000 |
H1 | 2024 | 2023 | Δ % H1 24 - H1 23 |
12 MONTHS 2023 |
||
|---|---|---|---|---|---|---|---|
| Revenue | 143 111 , |
100% | 114 945 , |
100% | +24.5% | 239 086 , |
100% |
| Other income |
4 599 , |
3.2% | 4 224 , |
3.7% | 9 036 , |
3.8% | |
| Total operating and income revenue |
147 710 , |
119 169 , |
248 122 , |
||||
| Consumption | (65 501) , |
(45.8%) | (57 630) , |
(50.1%) | (116 008) , |
(48.5%) | |
| Personnel costs |
(34 507) , |
(24.1%) | (26 453) , |
(23.0%) | (57 809) , |
(24.2%) | |
| Other operating costs |
(24 762) , |
(17.3%) | (19 489) , |
(17.0%) | (41 258) , |
(17.3%) | |
| EBITDA | 22 940 , |
16.0% | 15 597 , |
13.6% | +47.1% | 33 047 , |
13.8% |
| Depreciation | (9 538) , |
(6.7%) | (8 469) , |
(7.4%) | (17 071) , |
(7.1%) | |
| Gain/losses on fixed assets |
9 9 |
0.1% | (12) | (0.0%) | 1 520 , |
0.6% | |
| Write-downs/write-backs of non-current assets |
(8) | (0.0%) | - | 0.0% | - | 0.0% | |
| EBIT | 13 493 , |
9.4% | 116 7 , |
6.2% | +89.6% | 17 496 , |
7.3% |
| financial Non expense |
(698) | (0.5%) | (1 258) , |
(1.1%) | (3 334) , |
(1.4%) | |
| Exchange gains and losses rate |
843 | 0.6% | (2 091) , |
(1.8%) | (2 169) , |
(0.9%) | |
| EBT | 13 638 , |
9.5% | 3 767 , |
3.3% | +262.0% | 11 993 , |
5.0% |
| Income taxes |
(3 031) , |
(2.1%) | (530) | (0.5%) | 2 438 , |
1.0% | |
| PROFIT FOR PERIOD NET THE |
10 607 , |
7.4% | 3 237 , |
2.8% | +227.7% | 14 431 , |
6.0% |
| Minority interests |
465 | 0.3% | - | 0.0% | 277 | 0.1% | |
| PROFIT ATTRIBUTABLE TO THE GROUP |
10 142 , |
7.1% | 3 237 , |
2.8% | +213.3% | 14 154 , |
5.9% |
1Adjusted income statement: results exclude the impact of the application of IAS 29 (Financial Reporting in Hyperinflationary Economies) and, only for 2023 data the start-up costs of Sabaf India, Sabaf Mexico and the Induction division. This representation allows a better understanding of the Group's performance and of its comparison with previous periods.
Income statement1 - 6 months 2024
| € x 000 |
6 | MONTHS 2024 |
MONTHS 2023 |
Δ % 6M24 -6M23 |
||
|---|---|---|---|---|---|---|
| Revenue | 144 677 , |
0% 100 |
108 962 , |
0% 100 |
8% +32 |
|
| Start sales -up |
- | |||||
| Hyperinflation - Turkey |
(1 566) , |
983 5 , |
||||
| Adjusted revenue |
143 111 , |
0% 100 |
114 945 , |
0% 100 |
5% +24 |
|
| EBITDA | 23 674 , |
4% 16 |
11 414 , |
5% 10 |
4% +107 |
|
| Start costs -up |
- | 1 154 , |
||||
| Hyperinflation - Turkey |
(734) | 3 029 , |
||||
| Adjusted EBITDA |
22 940 , |
0% 16 |
15 597 , |
6% 13 |
1% +47 |
|
| EBIT | 12 394 , |
6% 8 |
1 855 , |
7% 1 |
1% +568 |
|
| Start costs -up |
- | 1 466 , |
||||
| Hyperinflation - Turkey |
1 099 , |
3 795 , |
||||
| Adjusted EBIT |
13 493 , |
4% 9 |
116 7 , |
2% 6 |
6% +89 |
|
| Net result |
8 363 , |
8% 5 |
(1 422) , |
(1 3%) |
n.a. | |
| Start costs -up |
- | 1 373 , |
||||
| Hyperinflation - Turkey |
1 779 , |
3 286 , |
||||
| Adjusted result Net |
10 142 , |
1% 7 |
3 237 , |
8% 2 |
3% +213 |
1Adjusted income statement: results exclude the impact of the application of IAS 29 (Financial Reporting in Hyperinflationary Economies) and, only for 2023 data the start-up costs of Sabaf India, Sabaf Mexico and the Induction division. This representation allows a better understanding of the Group's performance and of its comparison with previous periods.
Adjusted sales by market
Mln €
Adjusted sales by product
Balance Sheet - Reported
| € 000 x |
30/06/2024 | 31/12/2023 | 30/06/2023 |
|---|---|---|---|
| Fixed assets |
181 619 |
181 167 |
166 788 |
| Inventories | 65 624 |
61 985 |
59 524 |
| Trade receivables |
71 105 |
55 826 |
52 801 |
| Tax receivables |
8 663 |
11 722 |
8 994 |
| Other receivables current |
4 533 |
3 868 |
2 937 |
| Trade payables |
(51 034) |
(42 521) |
(45 766) |
| Tax payables |
(3 497) |
(3 025) |
(3 036) |
| Other payables |
(18 682) |
(16 007) |
(15 008) |
| working capital Net |
76 712 |
71 848 |
60 446 |
| Provisions for risks and severance indemnity |
(9 278) |
(9 477) |
(9 087) |
| Capital Employed |
249 053 |
243 538 |
218 147 |
| Equity Net debt |
174 290 74 763 |
170 388 73 150 |
144 316 73 831 |
| Sources of finance |
249 053 |
243 538 |
218 147 |
At 30 June 2024, the impact of the net working capital on revenue was 26.5% compared to 34.1% at 30 June 2023 and 30.2% at the end of 2023
Net financial debt at 30 June 24
€74.8 million (€73.2 million at 31 December 2023) includes €11.5 million related to the recognition of the put option granted to MEC minorities
Cash flow statement
| € x 000 € x 000 |
MONTHS 6 6 MONTHS 2024 2024 |
MONTHS 12 12 MONTHS 2023 2023 |
MONTHS 6 6 MONTHS 2023 2023 |
|---|---|---|---|
| Cash the beginning of the period at |
36 353 |
20 923 |
20 923 |
| Cash the beginning of the period at Net |
36 353 8 828 |
20 923 3 380 |
20 923 |
| profit Net profit Depreciation Depreciation Other income adjustments statement Other income adjustments statement Change in working capital net |
8 828 11 327 11 327 3 704 3 704 |
3 380 20 066 20 066 5 229 5 229 |
(1 422) (1 422) 9 547 9 547 4 400 4 400 |
| Change working capital in net - Change in inventories - Change in inventories - Change in receivables - Change in receivables - Change in payables - Change in payables Other in items |
(4 813) (4 813) (15 745) (15 745) 8 730 8 730 (11 828) (11 828) 1 662 |
4 079 4 079 7 375 375 7 2 438 2 438 13 892 13 892 |
545 545 3 398 3 398 6 897 6 897 10 840 10 840 974 |
| changes operating Other changes in operating items cash flow |
1 662 13 693 |
(2 715) (2 715) 39 852 |
974 24 339 |
| Operating Operating cash flow |
13 693 |
39 852 |
24 339 |
| Investments of disposals , net Investments of disposals , net Free Cash Flow Cash Flow Free |
(6 152) (6 152) 541 7 7 541 |
(16 942) (16 942) 22 910 22 910 |
(11 127) (11 127) 13 212 13 212 |
| Cash flow from financial activity Cash flow from financial activity Own shares buyback Own shares buyback Dividends Dividends Share capital increase Share capital increase Mansfield aquisition Mansfield aquisition PGA acquisition PGA acquisition Deconsolidation ARC Handan Deconsolidation ARC Handan Forex |
(10 545) (10 545) - (7 229) - (7 229) - - - - - - - (575) - |
(14 208) (14 208) (462) (462) - 17 312 - 17 312 (8 325) (8 325) (783) (783) - (1 014) - |
(6 261) (6 261) (462) (462) - - - - - (783) - (783) - 776 - |
| Forex Net financial flow |
(575) (10 808) |
(1 014) 15 430 |
776 6 482 |
| Net financial flow Cash the end of the period at Cash the end of the period at |
(10 808) 25 545 25 545 |
15 430 36 353 36 353 |
6 482 27 405 27 405 |
Dividends: on 28 May 2024 distribution of a gross ordinary dividend of €0.54 per share
SUSTAINABILITY
Sabaf: a sustainable business
Sustainability in the Business plan 2024 - 2026
Sabaf's strategy and governance model are aimed towards ensuring long-term sustainable growth. For Sabaf, sustainability is primarily based on sharing values with its stakeholders; compliance with common values increases mutual trust and encourages knowledge development " "
ESG Performance - Corporate Governance Remuneration policy
30
30
Environmental impact of different cooking fuels 1/3
About 30% of people on our planet, i.e. 2.5 billion people, are still relies on solid biomass fuels for cooking (wood, charcoal, animal dung, crop residues)
This population is mainly concentrated in Sub-Saharan Africa, where the unavailability of clean fuels affects 82% of the population, but significant percentages characterize also Central Asia, India, China, South-East Asia and Latin America
In addition to being harmful to the environment, the pollution produced by traditional fuels has important consequences on the health of users and families
5.5 billion people use fossil fuels (mainly natural gas and LPG) or electricity for cooking
Environmental impact of different cooking fuels 2/3
Environmental impact of different cooking fuels1
The environmental impact was measured using a scientific standard method (the ReCiPE 2016), which is based on 3 impact categories:
- damage to human health
- damage to ecosystem quality
- damage to resource availability
The environmental impact was highest in the case of coal cooking appliances (112) and lowest for LPG and methane cooking appliances (5 and 5.2 respectively).
Electric cooking appliances, with an impact of 9, highlighted an environmental impact equal to 180% of that deriving from gas hobs
Cooking through a gas hob instead of using firewood as cooking fuel, reduces the environmental impact by 80%
1 https://www.itjfs.com/index.php/ijfs/article/view/2170
Italian Journal of Food Science, 2022 – Environmental impact of the main household cooking systems – A survey, 2022 Alessio Cimini and Mauro Moresi, Università della Tuscia
Environmental impact of different cooking fuels 3/3
Promote access to energy sources with lower impact for the population that still uses solid fuels
Favor electric cooking only where and when the energy production mix is characterized by a predominant component of green energy
An induction hob causes lower CO2 emissions than a gas hob only if the electricity is produced with a % of renewable sources (and/or nuclear energy) higher than 70%
The Sabaf Group pursue a business development path consistent with the ecological transition plans:
- Sabaf is investing to promote diffusion of gas cooking appliances in emerging countries, replacing traditional cooking methods with much higher environmental impact
- At the same time, Sabaf is investing to enter the sector of induction cooking, the most efficient form of electric cooking, which is constantly growing in the European market, although such trend has slowed down in the last 3 years
A possible revolution - Hydrogen burners
The Sabaf Group actively takes part in research projects aimed at evaluating the feasibility of replacing natural gas (methane) with hydrogen as a source for gas cooking appliances
Burners operating with 100% hydrogen: laboratory tests and prototypes have confirmed the technical feasibility of these products
The possibility to use hydrogen on a large scale as a fuel has still to overcome important technological challenges, both in terms of its production and distribution
A possible solution in a relatively short time is the use of a mix of methane and hydrogen, through the existing distribution network
Hy4Heat project, promoted by the British government, concluded in 2022 with positive results
Pilot project in collaboration with the Colombian client Industrias Haceb → European Union Sustainability certification LCBA (Low Carbon and Circular Economy Business Action)
DISCLAIMER
Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially.
The Company's business is in the domestic appliance industry and its outlook is predominantly based on its interpretation of what it considers to be the key economic factors affecting this business. Forward-looking statements with regard to the Group's business involve a number of important factors that are subject to change, including: the many interrelated factors that affect consumer confidence and worldwide demand for durable goods; general economic conditions in the Group's markets; actions of competitors; commodity prices; interest rates and currency exchange rates; political and civil unrest; and other risks and uncertainties.
Pursuant to Article 154/2, paragraph 2 of the Italian Consolidated Finance Act (Testo Unico della Finanza), the company's Financial Reporting Officer Gianluca Beschi declares that the financial disclosure contained in this financial presentation corresponds to the company's records, books and accounting entries.
For further information, please contact
Gianluca Beschi [email protected] Elena Gironi [email protected]